EU Taxonomy – Classification of Sustainable Economic Activities

Overview

The EU Taxonomy Regulation establishes a unified classification system for environmentally sustainable economic activities. It underpins sustainability reporting (CSRD) and financial product disclosure (SFDR) and aims to prevent greenwashing.

Who Is Affected?

The EU Taxonomy impacts two main groups:

• Companies subject to CSRD reporting obligations (must disclose taxonomy metrics)
• Financial market participants (asset managers, banks, insurers) marketing financial products as sustainable
• Indirectly: all companies seeking green financing or subject to ESG ratings

Core Obligations

1. Taxonomy reporting: Disclosure of taxonomy-aligned turnover, CapEx, and OpEx shares
2. Six environmental objectives: Assessment against climate mitigation, climate adaptation, water, circular economy, pollution prevention, and biodiversity
3. Substantial contribution: Demonstration that an activity substantially contributes to at least one environmental objective
4. Do No Significant Harm (DNSH): No significant harm to the other environmental objectives
5. Minimum social safeguards: Compliance with OECD Guidelines and UN Guiding Principles
6. Technical screening criteria: Meeting the delegated acts’ specific thresholds and benchmarks

National Transposition

As an EU regulation, the Taxonomy applies directly:

• Germany: Integrated into CSRD reporting; BaFin oversees financial market application
• Austria: FMA and national audit bodies monitor compliance
• Switzerland: Not directly affected but Swiss financial institutions with EU business increasingly align with the Taxonomy